Morgan Stanley downgrades engineering software services provider Infotech Enterprises to "equal weight" form "overweight", while maintaining its target price at Rs 220, citing concerns about margins after a meeting with management.
The investment bank worries the "strong" headcount addition seen in the first half of the year will come without a corresponding increase in revenues or project starts.
Morgan Stanley says it believes management is looking to achieve revenue growth towards the lower end of 11-14% in fiscal 2013.
However, the investment bank warns "Infotech would need steep improvement in revenue growth" to more than around 5% quarter-on-quarter in the second half to achieve 11% revenue growth in fiscal 2013.